03: Preliminary steps
If other shareholders are involved, the impact on them and their views will need to be considered, as will the security of key employees.During the planning process, your business will also need to be valued. It is common for owners to overestimate the value of their own business, and it is advisable to get an independent valuation at the point of considering succession options.
In putting together a succession plan, a company owner will need to pay due consideration to the following points:
- The date upon which to transfer/exit the business and the reason(s) why.
- Who would be the successor in the event of a forced exit?
- Preferred successor and transfer/sale option.
- Future income requirement and retirement plans if applicable.
- Preferences in terms of future involvement with the company, eg a consultancy role or remaining as a shareholder or manager.
- Legal structure of the business, other shareholders, number of employees.
- The valuation of the business.
- Business performance and trends over the last three to five years.
- Value of intellectual property, if there is any.
- Consultation with family if ownership is to be transferred in this way.
- Understanding the tax implications of the sale or transfer.
- Legal implications of the succession.
